 "India leads in valuation premium but not in EPS growth, shows data")
The domestic markets are the most expensive vis-à-vis their historical averages but the earnings growth is no longer the fastest.
According to an analysis by CLSA, India price-to-earnings (P/E) multiple is nearly 30 per cent higher than its historical average, while two-year compound annual growth rate (CAGR) earnings growth (FY 24-26) estimates stand at 14 per cent.
The top markets in terms of earnings growth expectations for the next two financial years are South Korea and South Africa. Despite leading the charts in terms of earnings growth, both countries are currently trading at a discount to their long-term P/E multiples.
Taiwan and Thailand are other markets expected to post higher earnings per share (EPS) growth than India and yet command a lower premium relative to their historical averages.
“Consensus forecasts put Nifty EPS growth at 14.9 per cent year-on-year (YoY) in FY25 and 12.3 per cent YoY in FY26, or a 13.6 per cent two-year earnings CAGR. While this can be said to be a steady and encouraging pace of growth, the Nifty is no longer the earnings growth leader among the world’s 19 biggest market indices,” said CLSA in a note.
According to an analysis by CLSA, India price-to-earnings (P/E) multiple is nearly 30 per cent higher than its historical average, while two-year compound annual growth rate (CAGR) earnings growth (FY 24-26) estimates stand at 14 per cent.
The top markets in terms of earnings growth expectations for the next two financial years are South Korea and South Africa. Despite leading the charts in terms of earnings growth, both countries are currently trading at a discount to their long-term P/E multiples.
Taiwan and Thailand are other markets expected to post higher earnings per share (EPS) growth than India and yet command a lower premium relative to their historical averages.
“Consensus forecasts put Nifty EPS growth at 14.9 per cent year-on-year (YoY) in FY25 and 12.3 per cent YoY in FY26, or a 13.6 per cent two-year earnings CAGR. While this can be said to be a steady and encouraging pace of growth, the Nifty is no longer the earnings growth leader among the world’s 19 biggest market indices,” said CLSA in a note.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%